NCC protests ‘safety net’ proposals

USDA has taken some steps to improve the implementation of the new payment limitation and eligibility regulations in the 2008 farm bill, but the Agriculture Department still has a ways to go to make sure the rules follow congressional intent, the National Cotton Council chairman says.

In its last days in office, the Bush administration issued an interim final rule spelling out how it would implement the payment limit rules. The NCC filed extensive comments about those in January, said Jay Hardwick, the Council’s new chairman.

“Subsequently, the 4-PL handbook (the implementation guide for Farm Service Agency county offices) was published, and I am pleased to note that several of the areas in which the Council sought clarification were addressed favorably in the handbook,” said Hardwick, a producer from Newellton, La.

Speaking at the annual Mid-South Farm and Gin Show in Memphis, Tenn., Hardwick said those clarifications included:

• Allowing the spouse enhancement provision to apply to corporations including both spouses,

• Allowing members of joint operations to guarantee production loans made by joint operation, and

• Not requiring stockholders to contribute management and labor in the same proportion as their stock percentage.

But the NCC also told USDA officials it felt they had exceeded the intent of Congress in other provisions, particularly in the rules for being “actively engaged” in farming to be eligible for farm program payments.

A group of 22 U.S. senators subsequently sent a letter to Agriculture Secretary Tom Vilsack, urging the department to rewrite those rules to comply with the 2008 farm bill. The Council is also working with House members on a similar letter.

“We are not counting on any major relief from the previously-published regulations for 2009,” said Hardwick. “So with the June 1 deadline in mind, we would advise our members to set up appointments with FSA as soon as possible. (Vilsack has extended the comment period for the payment rules but has said any changes would apply to the 2010 farm program.)

“Certainly, you should consult competent legal counsel if necessary, and make sure your accountant understands the rules so that your adjusted gross income is properly separated into farm and non-farm income. To assist with this undertaking, we have made worksheets available to Council members on our website (www.cotton.org).

The new farm bill, which Congress passed twice last year, may not be the last word on farm programs, given the comments of Secretary Vilsack during the NCC’s annual meeting in Washington and President Obama’s recently released budget proposal for fiscal 2010.

“Last week, the Council joined 10 other agricultural organizations in a letter to Secretary Vilsack stressing the importance of maintaining the farm safety net in current law,” said Hardwick. “We pointed to the importance of direct payments and reminded him that farm bills are written for the longer-term and the bill’s safety net should not be withdrawn, reduced or in any way diminished even during those periods when commodity prices are high.”

The Council also responded to the president’s budget proposal, which would impose a phase-out of direct payments for farmers with annual sales revenues over $500,000 and the elimination of upland cotton storage credits among other changes.

“We believe that these proposed changes fail to recognize the hard work by Congress in overwhelmingly passing the 2008 farm bill,” said Hardwick. “Moreover, the new law is still being implemented and already introduces a number of significant program changes, but most importantly it maintains the safety net for production agriculture.”

The Council also noted the issuance of cotton storage credits, which had once been an administrative practice, “were made a part of the new farm bill and were paid for by our industry through modifications to cotton’s target price.”